INTRODUCTION
Decentralized exchange (DEX) is an improved form of market platform where Cryptocurrency and allied asset are traded without intermediaries unlike the traditional crypto based market where there is a central authorities who match the trading pairs and other services to supervise the transaction. In the decentralized platform, there's a direct transaction between the trading partners with the aid of smart contracts empowered by blockchain technology.
CHALLENGES OF TRADITIONAL CRYPTO BASED TRADE
In the traditional settings, the transaction are centralized and faced several challenges despite the success experienced in it's early days but P2p Model of Web 3.0 platforms have enhanced the transaction and solve the challenges. Lets explore some of those challenges.
LACK OF PRIVACY AND SECURITY BREACHES
Centralized platform mandates their users with several factors like KYC model to fetch their data and sensitive information which can be exposed and misused many times during transaction thereby making easy and soft target for possible attacks.
There have been many incidences of security breaches by hackers where millions of dollars have been lost, stolen and confiscated because there's a centralized vaults and being custodian of those data and assets.
TECHNICAL GLITCHES
Majority of the centralized platform usually experience technical lags and glitches might be due to overly stressed infrastructures, huge numbers of users and activities especially during the peak time. This incidence can frustrate their users as their transactions get disrupted and limitations on the services on platform to be employed.
CENSORSHIP AND RESTRICTIONS
Transaction based on intermediaries are not free from supervision of their central bodies and the oversight of governmental agencies which censored and restricted some of the transaction based on their policies, regulations and legal reasons thereby limiting the freedom, control and flexibility of their users.
Users from certain countries and regions are limited on services and features of the platform during transaction as their regulations and compliance requirements which leads to serious challenges in transaction.
THE VALUE OF THE P2P MODEL AND SOLUTIONS FROM DECENTRALIZED EXCHANGE
Peer to peer model (P2p) is a direct means of transaction between the users and their assets without intermediaries and it is effective due to the decentralized capabilities and smart contracts which fetch data and execution transaction based on the programmed terms and conditions without supervision of the central bodies. The nature and features of peer to peer transaction model have enhance the transaction of Cryptocurrency and allied asset. Let's talk about them and Solutions to problems mentioned above.
PRIVACY AND SECURITY
Blockchain and encryption are wonderful technologies which create a friendly and secure platform for peer to peer transaction as the safety of the transaction details and sensitive data are treasured. Also, Smart Contracts automate the process based on the programmed terms and conditions includes details of transaction that will ensure successful transaction without endangering the user's personal data and assets.
The details of the transaction are limited and shared between the trading pair without external influences which facilitate a smooth and wonderful trading experience, reductions of incidences of data breaches and other form of insecurities over the sensitive, personal data and details of transactions.
DECENTRALIZATION AND DIRECT INTERACTION
The transaction and exchange are successful between the nodes as they exercise absolute control over their assets and services without external influences. The nodes makes decisions and take risk over their assets as they are custodian of their assets, not a central bodies that facilitates the trading and exchange.
With the need for the intermediaries, there is effective exchange of services and assets between the trading pair directly as the decentralized platform offer exclusive projects and protocol where encryption and blockchain secured their personal communication and negotiation during transaction.
FLEXIBILITY AND GLOBAL REACH
Trading pairs are not mandated over a structural model of transaction but they exercise absolutely right to select the terms of transaction like payment methods, prices and conditions Which favor them during the transaction. Without restrictions and censorship of centralized platform, users enjoy a great freedom while transacting with their partner at very creative and decentralized manner.
Decentralization have great potential over restrictions based on regulations and legal reasons of any governmental agencies of any region and countries as the transactions are concluded successfully on P2p bases making it a best marketplace for Cryptocurrency and allied asset. It have global reach without any restrictions imposed on users of any countries around the world.
CONCLUSION
The decentralized exchange with peer to peer (p2p) transaction model have really influenced and modernized the crypto based transaction with great features which facilitate secure and cheaper trading and wonderful customer's experience. Many centralized platforms are adopting various forms of users transaction bases to enhance their service and activities.